The National Pension System (NPS) underwent its most significant transformation since inception on October 1, 2025, with the launch of the Multiple Scheme Framework (MSF) by the Pension Fund Regulatory and Development Authority (PFRDA). This revolutionary change marks a paradigm shift from the rigid, one-size-fits-all approach to a more flexible, personalized retirement planning ecosystem for India's 8.8 crore NPS subscribers.
Understanding the Multi Scheme Framework
The Multiple Scheme Framework fundamentally reimagines the NPS architecture by enabling subscribers to hold and manage multiple investment schemes under a single Permanent Retirement Account Number (PRAN), uniquely identified through their Permanent Account Number (PAN) across all Central Recordkeeping Agencies (CRAs).
This departure from the previous structure, where subscribers could operate only one investment choice per tier associated with one CRA, removes constraints on diversification and provides unprecedented flexibility in retirement planning. Under this new framework, Pension Fund Managers (PFMs) are empowered to design customized schemes tailored to specific subscriber personas, including self-employed professionals, digital economy workers, platform-based gig workers, and corporate employees with employer co-contributions.
Key Features and Innovations of MSF
100% Equity Allocation Revolution
Perhaps the most groundbreaking feature of MSF is the removal of the 75% equity allocation cap that existed under common schemes. For the first time in NPS history, subscribers can now invest 100% of their Tier I contributions in equity through high-risk scheme variants, aligning NPS more closely with aggressive mutual fund options and significantly enhancing wealth creation potential for long-term investors.
Impact of 100% Equity Allocation
Over a 30-year investment period, a 100% equity allocation versus a 75% equity allocation can result in approximately 20-21% higher corpus accumulation. For younger professionals with longer investment horizons, this translates to potentially lakhs or even crores of additional retirement savings.
15-Year Vesting Period Flexibility
Unlike common schemes that required subscribers to remain invested until superannuation age (typically 60 or 58 years), MSF schemes introduce a 15-year minimum vesting period. This means subscribers who enter a scheme at age 30 can exit with their accumulated corpus at age 45, subject to the standard exit rules of 60% lump-sum withdrawal and 40% mandatory annuity purchase.
This flexibility addresses a critical psychological barrier that previously deterred potential subscribers—the perception of funds being locked away for decades. Historical equity market analysis supports the wisdom of this 15-year timeframe: data from the last 30-35 years shows that in any 15-year rolling period, equity returns are never negative, and approximately 90% of the time, returns exceed 10% annually.
Multiple Schemes Under Single PRAN
The MSF's multi-scheme capability allows subscribers to simultaneously hold multiple schemes from different pension fund managers under a single PRAN. This enables sophisticated portfolio construction strategies, such as combining conservative debt-focused schemes with aggressive equity-heavy schemes, or diversifying across different fund management styles and philosophies.
Portfolio Diversification Example
A subscriber could allocate fresh contributions across:
- HDFC Pension's Equity Advantage Fund (100% equity)
- Axis Pension's balanced scheme
- UTI Pension's mid-cap focused scheme
All managed within one consolidated account—a level of diversification impossible under the previous framework.
Unified Cost Structure
MSF introduces a transparent, unified charge structure capped at 0.30% of Assets Under Management (AUM) per annum, consolidating previously fragmented charges. While this represents an increase from the 0.09% charged under common schemes, it eliminates account opening charges, transaction fees, and various other charges that were levied separately, providing greater clarity to subscribers about total costs.
MSF Schemes Launched by Major Pension Fund Managers
HDFC Pension Fund
HDFC Pension, India's largest private sector pension fund manager with over ₹1.4 lakh crore in AUM and 26 lakh subscribers, has launched three schemes under the MSF framework:
1. HDFC Equity Advantage Fund (Tier I)
This aggressive scheme targets long-term capital appreciation through 85-100% allocation to equity and equity-related securities, with up to 5% in alternative assets (primarily REITs and InvITs) and maximum 10% in cash equivalents. Benchmarked against BSE 200 TRI, ideally suited for younger professionals with 15+ years to retirement.
2. HDFC Surakshit Income Fund (Tier I)
A hybrid scheme maintaining 55-75% equity allocation with the remainder in corporate bonds and government securities. Fund managers dynamically adjust allocations based on market conditions, providing professional risk management while targeting long-term wealth creation.
3. HDFC Surakshit Income Fund (Tier II)
Modified version for Tier II accounts with capped equity exposure at 25%, designed for the unlocked Tier II account structure with no withdrawal restrictions.
ICICI Prudential Pension Fund
ICICI Prudential launched a unique women-focused scheme on October 1, 2025:
ICICI Prudential NPS - My Family My Future Plan for Women
This scheme aims to empower women with financial independence through flexible withdrawal options and greater control over retirement planning. It allows women to make small daily savings that become significant milestones for children's education, healthcare facilities, and family financial security.
UTI Pension Fund
UTI PF Wealth Builder NPS Equity Scheme
This scheme focuses on long-term capital appreciation by investing predominantly in equity and equity-related securities of companies beyond the top 100 by market capitalization. The mid-cap focus provides exposure to emerging companies with higher growth potential, suited for aggressive investors seeking India's mid-cap growth over 15+ years.
LIC Pension Fund
LIC PFL NPS Smart Balance Tier I
A balanced allocation scheme designed to deliver steady wealth creation while providing risk mitigation during volatile market phases, combining long-term growth potential of equities with stability of debt instruments.
Advantages of Multi Scheme Framework
Enhanced Flexibility and Choice
MSF dramatically expands subscriber choice, enabling selection from multiple schemes across ten different pension fund managers, each with distinct investment philosophies and risk profiles.
Higher Growth Potential
100% equity allocation significantly enhances wealth creation potential. A simulation shows monthly ₹10,000 contribution from age 25-60 could generate ₹17.7 crores in Equity Advantage Fund vs ₹8.5 crores in LC50 common scheme.
Reduced Behavioral Errors
The 15-year lock-in serves as a commitment device, protecting investors from panic selling during market volatility—a discipline mechanism most individual investors lack.
Professional Asset Management
Hybrid schemes provide tactical asset allocation management, with fund managers adjusting equity-debt ratios based on market conditions without subscriber intervention.
Persona-Specific Solutions
MSF enables targeted schemes for specific segments—gig workers, self-employed professionals, corporate employees—ensuring relevant retirement solutions for diverse needs.
Same Tax Benefits
All MSF schemes retain attractive tax benefits: Section 80CCD(1), 80CCD(1B) additional ₹50,000 deduction, and 60% tax-free corpus at exit.
Disadvantages and Limitations of MSF
Higher Cost Structure
The 0.30% annual charge represents a more than three-fold increase from 0.09% in common schemes. While eliminating fragmented fees, it reduces net returns over long investment horizons.
Increased Complexity
Multiple schemes across ten pension fund managers create bewildering choices that may overwhelm less financially sophisticated subscribers without professional guidance.
Limited Switching Flexibility
During 15-year vesting, subscribers can only switch from MSF to common schemes—not between different MSF schemes—limiting strategy adjustments.
No Existing Corpus Transfer
Existing common scheme investments cannot transfer to MSF schemes. Only fresh contributions go to MSF, creating bifurcated portfolio structure.
Same Investment Universe
MSF maintains equity investment limits to top 200 NSE stocks, preventing mid-cap and small-cap access compared to broader mutual funds.
Higher Market Risk
100% equity option exposes subscribers to significant volatility. Investors without temperament for substantial drawdowns may experience anxiety and poor decisions.
MSF vs Common Schemes: Comprehensive Comparison
| Feature | Common Schemes | Multi Scheme Framework (MSF) |
|---|---|---|
| Equity Allocation | Maximum 75% | Up to 100% in high-risk variants |
| Number of Schemes | Single scheme per tier | Multiple schemes under one PRAN |
| Vesting Period | Till age 60/58 (superannuation) | 15 years or superannuation (whichever earlier) |
| Fund Management Charges | 0.09% on AUM (fragmented charges) | 0.30% of AUM (unified charges) |
| Switching Flexibility | 4 times/year asset allocation; 1 time/year fund manager | Switch to common during vesting; between MSF after 15 years |
| Tax Benefits | Full NPS tax benefits | Same as common schemes |
Strategic Recommendations for Subscribers
For Young Professionals (Age 25-35)
Consider aggressive MSF schemes with 100% equity allocation to maximize wealth creation over 25-35 year horizon. The 15-year lock-in provides valuable discipline during market volatility.
For Mid-Career Professionals (Age 36-50)
Hybrid schemes offering 55-75% equity with professional asset management provide optimal growth-risk balance. Alternatively, combine aggressive and moderate schemes across different pension funds.
For Pre-Retirement Investors (Age 51-60)
Existing common schemes with lower costs and conservative auto-choice options may be more appropriate, as shorter time horizon reduces high equity exposure benefits.
For Existing NPS Subscribers
Maintain existing common scheme investments while directing fresh contributions to MSF schemes aligned with risk profile. This creates diversified portfolio spanning both frameworks.
Conclusion
The Multiple Scheme Framework represents a fundamental reimagining of retirement planning in India. By offering unprecedented flexibility, higher growth potential, personalized solutions, and professional management while maintaining NPS's hallmark features of tax efficiency and low costs, MSF positions NPS as a compelling choice for Indians across all demographics and income levels.
Yet with great flexibility comes great responsibility. The expanded choice demands greater financial literacy and more deliberate decision-making from subscribers. Those who invest time in understanding their options, honestly assess their risk tolerance, and maintain disciplined long-term contributions will be best positioned to harness MSF's potential and build substantial retirement corpora.
The key message: The time to engage seriously with retirement planning is now, and the Multiple Scheme Framework has made that engagement more flexible, powerful, and personalized than ever before for India's current 8.8 crore NPS subscribers and millions of potential future subscribers.
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